Reverse Logistics Addressed in PHMSA Advanced Notice of Proposed Rulemaking

The U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) is requesting input to help formulate policies regarding the transport of hazardous consumer products during the “reverse logistics” portion of the supply chain.

PHMSA published an advanced notice of proposed rulemaking (ANPRM) late last week soliciting public comments in order to identify ways to reduce the regulatory burden for persons handling hazardous materials during customer returns, also known as reverse logistics. Reverse logistics is the process that is initiated when a consumer product is returned to the original vendor, manufacturer, supplier or retailer.  The reverse logistics process may involve consumers, retailers, manufacturers, and even disposal facilities.

Our previous blog entry, “Product Returns Present a Hazmat Challenge for Retailers,” provides detailed insight on the issues surrounding the topic as they pertain to the retail industry. That said, reverse logistics of hazardous materials affects a multitude of industries, including high-tech, medical, pharmaceutical, automotive and aerospace.

In the ANPRM, PHMSA states that it plans to publish a notice of proposed rulemaking (NPRM) to implement regulations for reverse logistics that reduce the burden related to shipping consumer products.  PHMSA also responds to two petitions for rulemaking from the Council on the Safe Transportation of Hazardous Articles Inc. (COSTHA) and the Battery Council International (Battery Council).

According to the Reverse Logistics Association, the process of reverse logistics represents 3 to 15 percent of the U.S. gross domestic product, which is estimated between $360 billion and $1.8 trillion. Retail outlets often accept returns of hazardous materials from customers that are ultimately shipped back to distribution centers. Retail sales of goods are a primary driver of goods returned. According to the 2007 Economic Census, retail sales reached $3.9 trillion (a 28 percent increase from the 2002 census) among 1.1 million establishments and 15.5 million employees.

PHMSA enforcement efforts have shown that hazardous materials that are returned to the distribution centers or retail outlets are shipped in ways that are inconsistent with the requirements of the U.S. Hazardous Materials Regulations (HMR). Employees at the retail outlets responsible for packing and shipping these materials in many cases have little or no hazardous materials training. This results in inadequate packaging and hazard communication. PHMSA indicates that reasons that reverse logistics shipments are non-compliant include:

  • Lack of hazardous materials training by the employees at the retail outlet;
  • Different packaging from the original packaging being used to ship the material;
  • Lack of knowledge about the hazard class by the employee;
  • Potential for hazardous materials to be subject to Environmental Protection Agency (EPA) waste manifest rules;
  • Items that were once classified as consumer commodities may no longer meet that exception;
  • Undeclared hazardous materials may be shipped within the stream of commerce;
  • Properly-marked and labeled original packaging is being improperly re-used to ship returned products that are either not hazardous materials or hazardous materials for which said packaging is not authorized; and
  • Shipments may not be accompanied by appropriate hazardous communication, such as shipping papers, emergency response numbers, placards, labels, markings, and other requirements of the HMR.

In the ANPRM, PHMSA states that it is considering adding a section outlining the shippers’ responsibilities with respect to reverse logistics. This would address:

  • Classification of materials under the definition of reverse logistics;
  • Training requirements for employees who handle materials under reverse logistics; and
  • Packaging approved for the shipment of hazardous materials under reverse logistics.

The ANPRM requests comments on 15 questions:

  • What are the types of hazardous materials and quantities that are frequently returned?
  • What is the volume of returns? Is there a “rule-of-thumb” metric—e.g., 10% of retail sales are returned?
    • What is the current volume returned by private citizens?
    • What is the current volume returned by other businesses?
    • What are the most widely-used methods of return (U.S. mail, walk-ins, commercial carriers, etc.)?
  • Are returns directed to a disposal facility of the original manufacturer?
  • Should returns be the responsibility of the manufacturer?
  • To what extent should retail employees who package hazardous materials for shipments back to the distribution centers be subject to the training requirements in 49 CFR part 172, subpart H? Are retail employees currently being trained for the shipment of hazardous materials under 49 CFR part 172, subpart H?
  • Are hazardous materials being properly segregated as required by § 177.843 of the HMR when being shipped from retail outlets to their distribution centers? How are they being segregated?
  • Should certain hazard classes/divisions be excluded when considering regulations for reverse logistics? If so, why?
  • Should PHMSA define specification packages for materials shipped under reverse logistics? If so, why?
  • Are shipping and distribution companies assuring the safety of their employees and the public when allowing drop-box hazardous material returns? If so, how?
  • What precautions, if any, are these companies taking to avoid the mixing of hazardous materials and contamination of other packages that might contain hazardous materials and/or nonhazardous materials?
  • What role(s) do third party logistics providers play in the reverse logistics process, if any?
  • Have any specific safety risks been observed in returns of hazardous materials products that need to be addressed through rulemaking? If so, how should they be addressed and why?
  • How does the regulated community currently handle hazardous materials that are imported and must then be shipped back in the reverse logistics supply chain?
  • What data is available regarding the current and anticipated future number of reverse logistic shipments for hazardous materials?
  • Should PHMSA define “reverse logistics”? If so, to what extent should PHMSA define types of shipments that would receive a relaxation under the HMR for reverse logistics shipments?

The new rules could have significant impacts, including cost savings, safety and societal benefits.  Readers are strongly encouraged to provide PHMSA with comments and information as requested in the ANPRM.  Comments must be received by October 3, 2012.

Shipping hazardous materials in the retail industry presents its own unique set of challenges: a company must stay in compliance with the multitude of federal regulations governing the transport of hazardous materials in the shipping phase as well as during any reverse logistics process. Many companies have return and reuse operations that ship tons of hazardous materials without comprehending the risks – recent problems that have come to light with lithium battery shipping. Changes to consumer commodity (ORM-D) requirements only compound the challenges. It is a very positive sign that PHMSA is aware and focusing on these industry-wide issues.

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Labelmaster Services can help support your company’s reverse logistics operations. Our team collaborates with industry-leading domestic and international retailers, creating dynamic hazardous material shipping programs that mitigate risk, manage regulatory issues, and create a total compliance shipping environment. Our approach stresses both safety and cost efficiency – our deep understanding of regulatory exceptions can help retailers reduce shipping costs while seamlessly moving products in a compliant manner. Please contact us at 866-655-5539 or contact@labelmasterservices.com for more information on our reverse logistics services and products, or if you have questions on the ANPRM.

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